2012 (5) TMI 489 - AT - Service Tax

Tribunal emphasizes clarity in defining transactions for tax implications

The Tribunal dismissed the Revenue's appeal due to the lack of clarity in the show cause notice regarding the nature of the receipts and their relation to ... Mandap Keeping-Service - receipt of the amount on account of renting out land and open ground – Held that:- There is nothing whisper in the show cause notice as to whether the receipt made by the respondent was in relation to or in respect of any of the functions envisaged by law to be performed using the immovable property. Finding no substance in the show cause notice, there is no need to dilate the matter further. both stay application and appeal of Revenue are dismissed. Issues:1. Proper adjudication of money received for Mandap Keeping-Service.2. Taxation of amounts received for renting out land and open ground.3. Definition and categorization of Mandap under the Finance Act, 1994.4. Lack of clarity in the show cause notice regarding the nature of the receipt.Issue 1: Proper adjudication of money received for Mandap Keeping-ServiceThe Revenue argued that the money received by the respondent for providing Mandap Keeping-Service was adjudicated correctly, and the first appellate authority erred in reversing it. The Revenue sought restoration of the adjudication order. On the other hand, the respondent's representative supported the first appellate order.Issue 2: Taxation of amounts received for renting out land and open groundThe controversy revolved around the receipt of specific amounts for renting out land and open ground for various periods. The inquiry was made to determine whether these amounts should be taxed under the Finance Act, 1994. The show cause notice lacked clarity on the nature of the use of the immovable property and whether the receipts fell under the purview of the law.Issue 3: Definition and categorization of Mandap under the Finance Act, 1994The law defines a Mandap as any immovable property used for holding official, social, or business functions, including the letting out of furniture, light fittings, and floor coverings. A Mandap Keeper is the person or entity allowing temporary occupation of the Mandap for organizing such functions. The show cause notice failed to specify whether the receipts were related to any functions that would classify the property as a Mandap.Issue 4: Lack of clarity in the show cause notice regarding the nature of the receiptThe notice issued by the authority did not clearly establish the nature of the receipt and its implications under the law. It did not specify whether the receipts were in connection with functions that would categorize the property as a Mandap. As a result, the Tribunal found no substance in the show cause notice and dismissed both the stay application and the Revenue's appeal.In conclusion, the Tribunal dismissed the Revenue's appeal due to the lack of clarity in the show cause notice regarding the nature of the receipts and their relation to Mandap Keeping-Services. The judgment emphasized the importance of clearly defining the nature of transactions to determine their tax implications under the relevant laws.